EasternEconomicCorridor(EEC)

KPMG in Thailand

June 2018

Industry focus

kpmg.com/th

1 © 2018 KPMG Phoomchai Holdings Co., Ltd., a Thai limited company and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved.

The Eastern Economic Corridor (EEC) Development Plan, under the scheme of Thailand 4.0, aims to revitalize and enhance the well-known Eastern Seaboard Development Program – Thailand’s powerhouse of industrial production for over 30 years.

5 First Curve

Automotivefor the future

• Smart Park• HESIE 1, 4• Hemaraj Eastern Industrial

Estate (HEIE)• Eastern Seaboard Industrial

Estate (ESIE)• Hemaraj Rayong 36 Industrial

Estate (RY36)• Amata City• CP

• Yamato• Amata 1-2• Pinthong 1-5• Hemaraj Chonburi

Industrial Estate (HCIE) 1-2

• Hemaraj EasternSeaboard IndustrialEstate (HESIE) 2-3

5% GDP 100,000 jobsa year

Tax revenue of up to THB100 billion per year

1.5 times more travelers

Lower logistics cost by THB400 billion

1.8 times higher tourism income

Robotics &automations

Agriculture &bio technology

U-Tapaoairport

200,000

11,000

200,000

150,000

11,100

64,300

2023

2021

2023

2025

2024

2021

TG MROCampus

High-speed rail linking three

airports

Laem Chabang port phase 3

Map Ta Phut port phase 3

Double-track railway

• Thai Factory Development (TFD) 2

Bio energy &bio chemicals

Smart electronics

Aviation &logistics

Food for the future

Medical & health industry

World-class tourism Digital industry

5 New Curve

Combined public and private investment: THB1.7 trillion in the first five years (%)

21 industrial promotion zones from a total of 31 industrial estates (investment value of THB1.314 trillion over 10 years)

EEC Major Infrastructure Projects Budget(THB million)Expected tostart (year)

By 2020, EEC is expectedto generate:

10 targeted industries in EEC

U-Tapao AirportMap Ta Phut PortPhase 3Laem Chabang PortPhase 3High Speed RailNew CitiesTourismIndustryMotorwayDual-Track Railway

It will act as an ‘airport city’ (aerotropolis), consisting of services such as maintenance, repair, overhaul (MRO), cargo, free-trade zone, commercial gateway, medical cluster, military zone, etc.

This state-of-the-art hub for aircrafts is set to become the most advanced MRO center in the region.

The high-speed trains will link three major airports (Don Muang, Suvanabhumi, and U-Tapao) for greater convenience, reduce travel time, and cost saving.

The expansion will allow the port’s capacity to increase to handling 18 million TEU containers and three million cars per year.

Increase capacity to handle more liquid materials and natural gas.

The double-track rail lines will connect industrial zones nationwide to the three main ports.

Source: Eastern Economic Corridor Office (as of March 2018)

Source: Eastern Economic Corridor Office (as of April 2018)

Source: Eastern Economic Corridor Office (as of March 2018), Efinancethai

Source: SCB EIC Analysis, Bangkok Post

Source: Eastern Economic Corridor Office (as of March 2018)

“The Eastern Economic Corridor (EEC) project has been initiated to continue the success of Thailand’s Eastern Seaboard and support the digital economy. The EEC project will definitely create significant investments in infrastructure, industrial projects, and social projects, which will in turn strengthen the economic and social development of not only Thailand, but also other countries through interconnectivity. With unmatched opportunities and benefits provided by the Thai Government, it is an interesting opportunity for businesses, whether through direct investments or investing and participation in a Public-Private Partnership (PPP) scheme."

Tanate KasemsarnHead of Infrastructure, Government, Healthcare and HotelKPMG in Thailand

29.41%

11.76%

23.53%

0.65%

0.24%2.06%

11.76%

8.82%

11.76%

Chachoengsao

Chonburi

Rayong

1 ZONE

12 ZONE

8 ZONE

2© 2018 KPMG Phoomchai Holdings Co., Ltd., a Thai limited company and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved.

• Applications must be submitted by the end of 2019.• Investors are required to cooperate with an academic institution, research institution, or Center of Excellence to develop

human resources and improve the level of technology.

Based on the table below, EEC in Thailand offers a highly competitive incentive package ranging from Corporate Income Tax (CIT) and Personal Income Tax (PIT) benefits to favorable duration of land lease.

New investment incentives in the EEC – starting 1 January 2018

Comparison of the incentives provided by EEC and those provided by other ASEAN nations

Source: Eastern Economic Corridor Office, Board of Investment Thailand, KPMG Tax & Legal database

Source: SCB EIC Analysis, KPMG Tax & Legal database

Note: • Projects applied for this EEC incentive measure shall not receive additional incentives under merit on Industrial Area Development (under

the BOI announcement no. 2/2557). Moreover, certain targeted industries may be granted more tax exemption incentives (i.e. strategic)for up to 15 years (under the announcement no. 1/2560 of the Empowering Competition of Thailand in Target Industries Act B.E.2560 (ECTTI)).

• EEC of Innovation (EECi) is a new economic area focused on research and development, and innovation, including government andprivate-sector laboratories, field laboratories, leading testing and analysis centers, pilot plants and demonstration plants. These consistof Biopolis, Aripolis, Space Krenovapolis.

• EEC of Digital Park (EECd) is a new economic cluster, strategically located in the EEC, aiming to be the destination for digital global playersand digital biz innovators to Invest-Work-Learn-Play together in the park, where digital lifestyle meets digital business.

• EEC Aerotropolis (EEC-A) is a new urban model in which cities are built around airports, speedily connecting time-sensitive suppliers,manufacturers, distributors, and business people to distant customers, clients, and marketplaces.

“Evidently, the Eastern Economic Corridor (EEC) is one of the mega projects initiated by the Government to attract investments in advanced technology in the targeted new wave industries. EEC will create plenty of opportunities for investors to participate in, for instance, the Public-Private Partnership (PPP) to develop utilities, infrastructure and public transportation to connect areas over the greater three provinces and beyond. In order to achieve the ultimate benefits from EEC conditions under the BOI and EEC law, Revenue Code, and the ‘Empowering the Competition of the Country in Targeted Industry Act B.E.2560’,

Auaychai SukawongDirector, Tax and LegalKPMG in Thailand

Area-based Conditions BOI Incentives

1. Promoted Zone for SpecificIndustries (EECi, EECd, EEC-A)

No. of apprentices: > 10% of all employees hired orat least 50, whichever is lower.

< 8 years of CIT exemption plus additional 2 and 5 years for 50% reduction of CIT rate after the CIT exemption period.

2. Promoted Zones for Targetedindustries

No. of apprentices: > 10% of all employees hired orat least 50, whichever is lower.

< 8 years of CIT exemption plus additional 5 years for 50% reduction of CIT rate after the CIT exemption period.

3. Other Industrial Estates/Industrial Parks in EEC

No. of apprentices: > 5% of all employees hired orat least 25, whichever is lower.

< 8 years of CIT exemption plus additional 3 years for 50% reduction of CIT rate after the CIT exemption period.

Country CITCIT exemption

(For pioneer firms)PIT

Land Lease (Years)

Thailand 20%15 years (strategic),

9-13 years (technology-based),< 8 years (sector-based)

35% (17% for expats) 50+49

Singapore 17%< 15 years

Plus 5-40 years for CIT reduction rate at 5% or 10%

22%

30 (initial lease) plus more years

(subject to a business plan

and government policy)

Indonesia 25% 5-15 years plus two subsequent years for a 50%reduction in CIT 30% 30+20 (under the right-to-build title)

Malaysia 24%5 years (high technology)

10 years (strategic, selected industries) 5 years (partial (70%) exemption in CIT) (general)

28% (28% for

non-resident expats)50

Philippines 30% 6 years and maximum 8 years 32% 50

Vietnam 20% 4 years plus 9 years for a 50% reduction rate and 10% CIT rate for 15 years 35% 50 (general) / 70

(special case)

investors should be aware and be well-prepared as well as have the appropriate corporate structure and a good understanding of the requirements from the beginning.”

The information contained herein is of a general nature and is not intended to address the circumstances of any particular individual or entity. Although we endeavor to provide accurate and timely information, there can be no guarantee that such information is accurate as of the date it is received or that it will continue to be accurate in the future. No one should act on such information without appropriate professional advice after a thorough examination of the particular situation.

© 2018 KPMG Phoomchai Holdings Co., Ltd., a Thai limited company and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved.

Key contacts

KPMG in ThailandEmpire Tower, 48th – 50th Floors 1 South Sathorn Road, Yannawa Sathorn, Bangkok 10120T : +662 677 2000

Twitter: @KPMG_TH

Fecebook: facebook.com/KPMGinThailand

Linkedlh: linkedin.com/company/kpmg-thailand

STAY CONNECTED

Tatiana BespalovaPartner, Tax & Legal KPMG in Thailand T: +662 677 2697E: tbespalova1@kpmg.co.th

Chakri Boonyakiat Director, AdvisoryKPMG in Thailand T: +662 677 2271E: chakri@kpmg.co.th

Tanate KasemsarnHead of Infrastructure,Government, Healthcareand HotelKPMG in Thailand T: +662 677 2750E: tanate@kpmg.co.th

Auaychai SukawongDirector, Tax and LegalKPMG in Thailand T: +662 677 2644E: auaychai@kpmg.co.th

Yoshimoto Yuji Director, AdvisoryKPMG in Thailand T: +662 677 2607E: yyoshimoto@kpmg.co.th

Surayos ChuephanichDirector, AdvisoryKPMG in Thailand T: +662 677 2752E: surayos@kpmg.co.th

Vilaivan Pholprasert Partner, Audit KPMG in Thailand T: +662 677 2325E: vilaivan@kpmg.co.th

Emerging Trends in Infrastructure 2018There are a number of trends in this year’s report that could be seen as a continuation of previous evolutions. At the same time, this year’s edition also highlights topics that are only now emerging and, we believe, will continue to shape infrastructure markets for years to come.

Collaborating along the Belt and RoadChina’s Belt and Road Initiative (the Initiative or BRI) presents significant opportunities to promote economic cooperation and connectivity between countries, companies and people across the globe. In addition to infrastructure development, the Initiative is expected to lead to significant opportunities for a wide range of other business sectors, such as real estate, consumer markets and financial services, to name a few.

Connecting Hong KongThis survey explored two areas. First, it asked the respondents about their overall perceptions of Hong Kong’s smart city’s strengths and weaknesses. Then it looked in more detail at six key sectors for Hong Kong’s smart city development: transportation and mobility, finance, education, environment, healthcare, and energy and resources.

Infrastructure Risks 2018Emergence of fast-evolving digital technologies, increased regulatory pressure and global economic uncertainty are key factors in the current risks landscape. KPMG Risk Consulting assists clients to develop robust risk mitigation methods by interpreting the underlying drivers of global risks.

Click on the links above to access the publications.

You may also be interested to read...KPMG member firms provide a wide-ranging offering of studies, analysis and insights on the infrastructure industry. For more information, please go to kpmg.com/th/Infrastructure.

KPMG EasternEconomicCorridor Center

KPMG Eastern Economic Corridor Centerwas created to facilitate businesses and keystakeholders in harnessing the growth and investment opportunities in Thailandís Eastern Economic Corridor (EEC) initiative.

https://home.kpmg.com/th/en/home/campaigns/2018/06/eec.htmlhttps://home.kpmg.com/th/en/home/industries/infrastructure.htmlhttps://assets.kpmg.com/content/dam/kpmg/xx/pdf/2018/02/emerging-trends-in-infrastructure.pdfhttps://assets.kpmg.com/content/dam/kpmg/cn/pdf/en/2018/01/connecting-hong-kong.pdf?_ga=2.175495778.1132574702.1518666784-1282110516.1510908507https://assets.kpmg.com/content/dam/kpmg/cn/pdf/en/2018/03/collaborating-along-the-belt-and-road.pdfhttps://home.kpmg.com/content/dam/kpmg/za/pdf/2017/12/Infrastructure%202018.pdfhttps://home.kpmg.com/th/en/home.htmlhttps://twitter.com/hashtag/kpmg?lang=enhttps://www.facebook.com/KPMGinThailand/https://www.linkedin.com/company/kpmg-thailandhttps://home.kpmg.com/th/en/home/campaigns/2018/06/eec.html